ILO:
a) Reasons why some firms tend to remain small and why others grow
b) Significance of the divorce of ownership from control: the principal-agent problem
c) Distinction between public and private sector organisations
d) Distinction between profit and not-for-profit organisations
a) Reasons why some firms tend to remain small and why others grow
b) Significance of the divorce of ownership from control: the principal-agent problem
c) Distinction between public and private sector organisations
d) Distinction between profit and not-for-profit organisations
Starter
What would be the benefits of growing a business?
How can we demonstrate this using theory of the firm?
How can we demonstrate this using theory of the firm?
Growth
Watch the videos to consolidate your understanding of business growth:
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Why Businesses Grow I A Level and IB Economics
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Explaining the Constraints on Business Growth I A Level and IB Economics
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Example exam question: Assess the benefits of Amazon focus on growing its product portfolio and where it operates based upon the two videos below. (15 marks)
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Inside the UK's first Amazon Fresh store
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Can Amazon Succeed In India?
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Remaining Small
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>Lack of finance for expansion >Avoiding diseconomies of scale >Providing niche products which have a low PED or high YED >Offering a more personal service as they get to know customers and their needs E xample: 'I dropped out of school, now I sell £60,000 trainers ' >Acting as suppliers >Local monopolies at specific times |
Use your economic toolkit to explain the ability to sell bespoke bikes for $4,550 to generate profit.
How a $4,550 Bespoke Bicycle is Made
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Divorce of ownership from control
Examine how effective the methods below are at reducing the principal agent problem? (8 marks)
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How power is shared in the John Lewis Partnership
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Ian Wright welcomes Alan Pardew's eight year deal
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Watch the revision videos associated to the principal agent problem:
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The Principal Agent Problem - revision video
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Short Answers - Principal Agent Problem
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Public & Private sector organisations
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Assess if libraries should be a public service? (10 marks)
Closing libraries: “a crime against children”?
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Start at 1:50, apply your toolkit to the following debate
Pros & Cons of Privatising the NHS | Medicine MMI | Kenji & KharmaMedic
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Assess if the railways should be re-nationalised?
(12 marks)
Should our railways be renationalised? - BBC Newsnight
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Watch the revision video associated to public and prive sector firms.
Public and Private Sector Economics I A Level and IB Economics
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Relevant links:
Privatisation work sheet - Wiki
Privatisation work sheet - Wiki
Profit & Non-profit organisations
Starter: sorting card activity
Based upon the Milton Friedman debate, and your knowledge of Adam Smith. Explain what is meant by a profit organisation and the benefits of such an aim for economic agents & efficiency.
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Milton Friedman on Self-Interest and the Profit Motive 1of2
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Milton Friedman on Self-Interest and the Profit Motive 2of2
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Why might profit maximisation not be an efficient long term aim?
Shareholders Care About More Than Just Profits
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What efficiencies & inefficiencies exist within a charity business model?
Charity: how effective is giving? | The Economist
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